May 24 (Bloomberg) -- European Central Bank Governing Council member Christian Noyer ruled out a restructuring of Greeceâs debt, calling it a âhorror storyâ that the central bank cannot accept. âThereâs no solution possibleâ for Greece other than to follow its austerity program, Noyer told reporters in Paris today. âRestructuring is not a solution, itâs a horror story,â and if the country fails to meet the terms of its bailout, Greek government debt will be âineligible as collateralâ at the ECB. The remarks put Bank of France Governor Noyer in line with ECB Executive Council member Juergen Stark and Lorenzo Bini Smaghi as well as Bundesbank President Jens Weidmann. All of them said last week that the Frankfurt-based ECB may stop accepting Greek sovereign debt as collateral if euro area governments proceed with a plan to extend Greeceâs debt repayment schedule. The ECB last year suspended the minimum credit-rating threshold for Greek bonds after the countryâs banks were shut out of credit markets for funding. Banks can borrow as much money as they need for up to three months against collateral. The ECB âaccepted temporarily to reduce our minimum level of collateral to BBB,â Noyer said. âIf the program is no longer respected, if a country is found off track, immediately our assumption of BBB disappears. If it goes out of the EU program, the collateral is ineligible.â Insuring Debt The cost of insuring Greek debt against default rose to a record yesterday and the yield on its 10-year bonds increased to a euro-era high as Prime Minister George Papandreouâs government met in Athens to endorse a new package of spending cuts and state-asset sales. Greece is struggling to contain its deficit more than a year after European governments first offered it 110 billion euros ($155 billion) in financial support. European finance ministers on May 16 floated the idea of talks with bondholders over extending Greeceâs debt-repayment schedule, saying the bailout has failed to restore the countryâs financial health. On May 20, Fitch Ratings cut Greeceâs credit rating to B+ from BB+, saying that extending its debt maturities would âtrigger a credit event and default rating.â Moodyâs Investor Service said today that repayment extensions or voluntary swaps -- what European officials term âsoft restructuringâ -- would constitute a default and shut Greece out of capital markets for a âsustained period.â Banking Impact In the case of a default, âthe Greek banking sector would require recapitalizing to offset banksâ losses on Greek government bonds, and continued liquidity support from the European Central Bank, at least for as long as the sovereignâs own access to the capital markets remained impaired,â according to the note, which sought to assess the impact of a default. Noyer said any restructuring of Greeceâs debt would cost European taxpayers more as Greek banks would become insolvent, requiring government support that would eventually have to come from other countries. Among other losers in a restructuring would be Greek pension funds, the ECB and European governments who have already lent to Greece, he said. http://noir.bloomberg.com/apps/news?pid=20601087&sid=aSFdMNey2cCk&pos=3 Ok, can we finally stop this stupid restructuring debate being run by Anglo Saxon media oulets around the clock? It seems UK and US investment banks have nothing else to do then to stuff WSJ, FT and others with their "default horror stories". Yawn.